9 MetaTrader Indicators You Need to Know

Technical analysis is the discipline of discerning patterns and trends on a price chart. It serves as a way to help traders understand market conditions based on past price data, and spot potential trading opportunities.  

When performed correctly, technical analysis allows traders to better control their trades by providing support for or denying trading ideas. This is achieved through the use of specialised drawings and tools known as technical indicators.  

In this article, we’ll explore nine popular technical indicators that can be found on MetaTrader, the leading platform for traders and investors worldwide.  

Technical indicators, a brief overview 

Take a peek at MetaTrader or any popular trading or price charting software and you’ll discover hundreds of technical indicators, ranging from simple to complex.  

This can be overwhelming for newcomers, but the key to knowing which technical indicator to use lies in understanding what they are designed to measure. 

How do technical indicators work? ^[1]  

In essence, technical indicators allow traders to predict future price movements. But how?  

Well, technical indicators are pattern-based signals that take into account historical data around price, volume and open interest for a given asset. Based on past data, technical indicators point to where the price of the asset could go next.  

By using several different technical indicators, traders can improve their chances of successfully predicting future market movements. This is because while different technical indicators measure different factors, when taken together they can act to confirm or deny a trader’s prediction.  

Having said that, technical indicators are not some magic crystal ball that lets you see the future. They are tools which can be very helpful, but It takes time, discipline and experience to hone the skills to properly make use of them. 

High-low Indicator ^[2]  

When attempting to discern the prevailing trend of a broader market or a market index, the High-low Indicator may be useful.  

Also known as the High-low Index, this indicator compares stocks that are reaching their 52-week highs with stocks that are hitting their 52-week lows. It is expressed as a 10-day moving average of the Record High Percent, which is calculated as follows: 

• New Highs / (New Highs + New Lows) x 100 

When the High-low Indicator is positive and rising, the market is considered to be in a bullish phase. When the indicator is negative and falling, the market is considered bearish. Readings above or below 50 indicate bull and bear markets accordingly.  

How to use: 

The High-low Indicator should be paired with a 20-day Simple Moving Average (SMA); this allows the trader to more easily find entry and exit points for trades. When the High-low Indicator crosses over the 20-day SMA, a buy signal is generated. When it crosses under the 20-day SMA, a sell signal is generated.  

Renko Indicator ^[3] 

A Renko Chart is an alternative way of displaying price action on a price chart, invented by the Japanese. It is plotted using a series of diagonal blocks set at 45 degrees to the previous block – up when the price increases, and down then the price decreases. Unlike candlestick or bar charts, Renko charts are plotted based solely on price movement; standardised time intervals are not included.  

Thus, a Renko chart is plotted by adding a block when a fixed price threshold is reached – this is known as the box size. Box sizes can be any size, or they may also follow the Average True Range (ATR), itself another technical indicator.  

For instance, if an interval of $0.50 is used, then the box size is said to be $0.50.The next block up will only be added when the price of the asset goes from $10 to $10.50. Conversely, if the price falls from $10 to $9.50, the next block down will be added.  

Due to how they are plotted, Renko charts allow traders to filter out market noise by ignoring price movements smaller than the chosen box size. In this way, only price changes of a certain magnitude are recorded, making for a cleaner reading of the prevailing price trend. 

How to use: 

Traders can follow the bricks in a Renko chart to spot trading opportunities. For instance, after a series of green, upwards-rising blocks is followed by one or two red, downwards-falling blocks, this can indicate a trend change, presenting an opportunity to enter a swing trade on a short position. 

When the next green block appears, this signals an upswing is on the cards, which means the trader should exit the trade and prepare to enter the next one. Depending on the box size and trading timeline, some traders may choose to wait for a longer series of blocks to appear before committing to a trade. 

Chart Group indicator 

One of the reasons MetaTrader is so well-loved is because of its flexibility. You can add custom tools and indicators to the base platform to carry out technical analysis in the way you prefer.  

One such custom indicator is the Chart Group indicator, which is more like a meta-indicator. The core function of Chart Group indicator is to allow you to link several price charts together.  

When linked, changes you make in one chart are instantly and automatically reflected in all linked price charts. This lets traders avoid having to juggle multiple price charts and indicators at once.  

How to use: 

If your version of MetaTrader does not offer the Chart Group indicator, you’ll need to download an add-on that contains it. You can start by looking on the MetaTrader Market Place and installing the relevant indicator package ^[4].  

Once done, you can apply the Chart Group indicator to all the price charts you want to connect – an indicator will be displayed in the bottom right when you do so.  

A common application of Chart Group indicator is to view an asset or market simultaneously across several different price charts (with different time frames, or with different drawings on them).  

You can do so simply by changing the trading symbol on one linked price chart; this will cause all linked price charts to also display the same asset or market.  

Pivot Points indicator ^[5]  

Traders dealing in stocks or commodities may wish to anticipate support or resistance levels in the coming trading session. This is because support and resistance can indicate entry and exit points, both for stop-losses and profit-taking.  

One way to gauge support and resistance is through the application of pivot points. Pivot points are defined as “the average of the high, low, and closing prices from the previous trading day.” 

On the subsequent trading session or day, if trading takes place above the pivot point, this indicates that market sentiment is bullish. If trading is below the pivot point, this indicates bearish market sentiment.  

Clearly, planning trades using pivot points can be highly useful. Thankfully, investors don’t have to calculate pivot points by themselves – they can simply make use of the Pivot Point indicator.  

How to use: 

As its name suggests, the Pivot Point indicator automatically calculates the pivot points in a market, and displays it on the price chart for you.  

With this indicator active, investors can clearly see whether trading is above or below the pivot point, gaining insight into what the market sentiment is like in the current trading session.  

Relative Strength Index indicator ^[6]  

The Relative Strength Index indicator (RSI) is a technical indicator that is used to measure the speed and magnitude of a security’s recent price changes, allowing traders to discern whether the market is overbought or oversold. 

For this reason, RSI is classed as a type of momentum indicator. It is a technical indicator that compares a security’s strength when prices are increasing to its strength when prices are decreasing. Traders can relate the result of this comparison to price action to glean how the security may perform.  

Additionally, the RSI can also alert traders when trends are likely to continue, or signal when a reversal is coming. Due to the multiple ways RSI can help traders make an informed trading decision, it is one of the most popular technical indicators in use today. 

How to use: 

Often displayed at the bottom of the price chart, the RSI appears as an oscillator that fluctuates between two bands. As price changes over time, the RSI moves up or down in tandem.  

RSI is graphed from 100 to 0. In readings of 30 and below, the asset is considered oversold, while readings of 70 and above indicate the asset is overbought. When the RSI rises or falls beyond these thresholds, traders may take them as trading signals.  

For instance, when the RSI falls below 30, this means the security is oversold (i.e., traded lower, and thus has the potential for a price bounce). Some traders may take this as a bullish signal and take a long position in response.  

Conversely, when the RIS rises above 70, this indicates that the security is overbought (i.e., trading above its intrinsic value, with a price correction expected). This may be taken as a bearish signal, and traders may open short positions for potential gains.  

For greater accuracy, RSI readings should be adjusted according to prevailing market conditions. As an example, during a prolonged uptrend, the asset may actually be oversold well above the RSI reading of 30.  

Fibonacci retracements indicator ^[7]  

Fibonacci numbers are a series of specific numbers that are abundantly found in nature, being reflected in plant growth, animal shapes such as sea shells, and even weather patterns.  

Because they are regarded as an expression of natural patterns, many traders believe Fibonacci numbers also have relevance in the financial markets.  

This has given rise to the use of Fibonacci retracements in trading, which are a series of horizontal lines that indicate potential levels of support and resistance within a price range. By overlaying Fibonacci retracements on a price chart, trades can quickly spot points where an asset might reverse or stall.  

Fibonacci retracement levels are fixed numbers based on the famed Fibonacci Sequence, a series of numbers in which each number is the sum of the two numbers preceding it.  

Thus, Fibonacci retracements are: 23.6%, 38.2%, 50%, 61.8%, 78.6%, 100%, 161.8%, 261.8%, and 423.6%. Although not found in the Fibonacci Sequence, the ratio 50% is also regarded as a retracement level.  

How to use: 

The Fibonacci retracement indicator is plotted between two significant price points on a chart, such as between a recent low and a high. Simply drag the indicator between the two points, and the retracement levels are automatically plotted for you, based on the ratios stated earlier.  

So how does it work? Let’s say after an uptick, a stock’s price retraces to the 61.8% level, and then starts moving up again. Since the bounce took place at a Fibonacci retracement level during an uptrend, a trader may be convinced the stock will continue to move upwards, and decides to go long on the stock. To mitigate risk, a stop-loss is placed at the 61.8% level. 

Besides placing stop-losses, Fibonacci retracements can also be used to find trade entry points or set price targets.  

Now, as with all technical indicators, Fibonacci retracements are not always guaranteed to work. In fact, inexperienced traders may find it difficult knowing which Fibonnaci retracement level they should be looking at when making their trading decisions. Also, it is not uncommon for prices to exceed retracement levels, instead of halting as they’re supposed to.  

It is highly advisable to combine Fibonacci retracements with other technical indicators to clarify your trading decision.  

Ichimoku indicator ^[8] 

In Japanese, “Ichimoku” means “at a glance”. The Ichimoku indicator is a technical analysis indicator designed to provide a clear view of multiple factors on a price chart, including momentum, trend direction and future support and resistance levels.  

It does this through a series of five calculations, including a nine-period average, a 26-period average, an average of those two averages, a 52-period average, and a lagging closing price line. Two of these five lines form the “cloud”, where the difference between them is shaded in.  

Because it is able to convey a greater degree or information compared to traditional candlestick charts, Ichimoku charts are often used by advanced traders for their well-defined trading signals.  

Another unique feature is that the cloud is able to forecast future points of support or resistance in the future.  

How to use: 

The gist of using the Ichimoku indicator is to track the cloud, which is a key part of the indicator. When the asset’s price rises above the cloud, an uptrend is present. This is further strengthened if the top of the cloud is also moving upwards.  

Meanwhile, if the price falls below the cloud, the trend is currently down. This is, again, strengthened if the bottom of the cloud is also moving in a down direction. 

The Ichimoku indicator works well with several other technical indicators. For instance, it can be paired with the RSI to further confirm price momentum in a certain direction. This lends conviction to a trader’s future predictions. 

MACD indicator ^[9] 

The Moving Average Convergence/Divergence (MACD) indicator may be a mouthful, but it is also a highly popular and well-known technical indicator. It is used primarily to help investors identify price trends, which is instrumental in planning entry and exit points in trading. It is also used to measure trend momentum, helpful in confirming or denying trading ideas.  

How the MACD works is that it measures the relative changes between two exponential moving averages (EMAs) to signal momentum and potential trend reversals. It is plotted by subtracting the 26-day EMA from the 12-day EMA, creating the MACD line.  

A 9-day EMA of the MACD line – called the signal line – is plotted on top of the MACD line, acting as a trigger to buy or sell. 

Note that 9/12/26-EMA is the classic setting for MACD, but advanced traders have been known to use EMAs with different durations to better suit their purposes.  

How to use: 

There are many ways to interpret the MACD indicator, but the most common ways are crossovers, divergences and rapid rises and falls.  

In simple terms, a crossover is a trading signal generated by the interplay between the MACD line and the signal line. When the MACD line falls below the signal line, this is a bearish signal indicating a selling opportunity.  

On the other hand, when MACD rises above the signal line, this is a bullish signal, suggesting there is still upside in the asset’s current trajectory. Crossovers are strengthened when they are in accordance with the prevailing price trend.   

Meanwhile, divergences occur when the MACD forms highs or lows that go beyond the corresponding highs or lows in the asset’s price. This can be a very powerful signal that points to the direction of incoming price action. 

For instance, if MACD forms two rising lows that correspond to two falling lows in the price, this is often a strong bullish signal that points to a positive long-term rising price trend.  

On the other hand, a bearish divergence forms when the MACD forms two falling highs that correspond with two rising highs on the price. Should a bearish convergence appear during a prevailing downtrend, this indicates prices are likely to continue falling.  

Lastly, when the shorter-term moving average pulls away from the longer-term moving average, a rapid rise or fall in the MACD may be observed. Traders take these occurrences as signals that the asset is overbought or oversold, and that a correction to normal levels is in order.  

Another momentum indicator, such as the RSI, can be used to confirm overbought or oversold conditions, although it’s important to understand that both indicators may not always align. For instance, the RSI may signal an extended period in which an asset is overbought, while the MACD indicates buying pressure is still growing.  

Conclusion  

We’ve covered 9 of the most popular technical indicators, how they work and what they do. While these indicators are relatively well-known and have stood the test of time, they represent only the tip of the iceberg.  

Still, the technical indicators we’ve discussed encompass a good majority of what technical indicators attempt to measure. In your own journey of technical analysis, you’re certain to come across many other technical indicators including custom ones, but you’ll find that many of them are simply variations of these.  

Eager to start using technical indicators to boost your trading results? Vantage Markets provide top-class trading platforms, including MetaTrader 4 and MetaTrader 5, that provide access to these powerful technical indicators – and many more.  

Try them out for free with a Vantage trading account. Sign up now! 

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